Just last month, non-fungible tokens (NFTs) catapulted to fame with record-high sales of Beeple and Nyan Cat at $69 million and $590,000 respectively. Who would have thought that a collage and a low-resolution meme of flying kitten pooping rainbows would open up the gateway to an all-new crypto art economy?
The phenomenon has left many investors scratching their heads, but NFTs are not an entirely new trend or technology. NFT is a token built on ERC-721 to identify unique artwork or intellectual property.
In this guide, we will demystify the complexity of NFTs, crypto art and provide valuable insights for you to make money as a creator or investor.
What Is a Non-Fungible Token?
A non-fungible token is a cryptographic token enabled by ERC-721, an Ethereum-based smart contract that is indivisible – making it unique for individual intellectual property tracing!
In other words, a non-fungible token is akin to receiving a glimmering token in an old-school arcade that can only be used for specific games; every coin you use is non-divisible or refundable. Unlike ERC-20, NFTs cannot be interchangeable with other tokens.
Therefore, non-fungible tokens possess three irresistible characteristics – uniqueness, rarity, and indivisibility – for crypto artists and creators.
NFTs: Yay or Nay?
Do we really need NFTs? NFTs empower digital artists to watermark their work across the entire digital economy. For instance, music creators can use NFTs to monetize their music and enforce IP rights to prevent piracy. At the receiving end, collectors of arts would find that the process of collecting digital art is simplified and authenticated.
One of the growing real-world adaptations of NFTs is NBA Top Shots – a platform built on FLOW blockchain that allows users to capture highlights of the NBA games and mint them into NFTs. In February 2021, the sales of Top Shots NFTs skyrocketed to over $218 million. As of the time of writing, the crypto art economy is valued at $100 million.
As the world moves towards a digital economy post-pandemic, NFTs may just be the key to accelerate the digitalization process.
Step-by-Step Guide to Selling Your First NFT
Akin to selling items on eBay, the process of selling NFTs includes setting up an Ethereum account, listing the digital product, and a crypto wallet to receive the payment.
Several platforms allow you to mint your first crypto art. In this example, we will walk through Opensea, one of the most popular platforms for NFTs.
Step 1: Creation of Account on NFT marketplace
Firstly, access OpenSea and click on create.
You will then be prompted to link up your Metamask wallet that supports Ethereum. A way to create Metamask wallet is to add it to the browser as an extension through the chrome store. Once you’ve logged in to the wallet, it would automatically sync up with the OpenSea account.
Step 2: Start Creating Your Crypto Art!
Next, hover to the collection tab to create your ‘first store’ and start listing your digital arts. Basically, you can mint any form of digital art ranging from images, audio, and GIFs.
It doesn’t cost anything to list on OpenSea, but gas fees may apply due to the usage of Ethereum network. The cost of gas fees is directly correlated to network congestion. Therefore, listing your digital art at ungodly hours may just reduce the cost of gas fee!
Step 3: List and Sell Your First NFT!
Next, access your collection and click sell! After defining the parameters of minting the NFTs on the selling page, you are on the way to building a new passive income.
Isn’t this easier than selling WhatsApp stickers on App stores? Let’s get creative, digital artists wannabes!
Drawbacks of NFTs
Here’s the big question: Can you really sell anything and get rich?
NFTs aren’t entirely new to the crypto world. Cryptokitties and celebrity music were the pioneers of NFTs in 2018. So, why didn’t it take off back then? NFT platforms were unregulated – making them expensive and inaccessible to average internet users.
BitClout, for instance, is facing legal charges for selling NFTs without users’ consent. According to BitClout’s white paper, profiles of 15,000 influencers were “pre-loaded” into the BitClout platform, and users would be able to transact on those tokenized accounts by acquiring BitClout’s ‘creator’ token. However, the influencers have not consented to the usage or resharing of their content.
In other words, Bitclout has reportedly tapped on the grey area of social media regulations. Everything posted on social media is in public and accessible to anyone. However, can we mint someone’s post and call it our own with a token? It’s a developing controversy to be resolved… widely debated by both proponents and opposers within the field.
Most recently, Prime Minister of Singapore Lee Hsien Loong has requested his name and picture to be removed from a cryptocurrency platform, after receiving media queries from Singapore-based media, The Straits Times, about BitClout.
No doubt, NFTs have revealed a strong demand for intellectual properties. However, critics have dismissed this as another fad that will pass. Regardless, crypto artists rejoice over the recognition of their creations and the emergence of platforms to monetize their assets quickly.